The Bank of England's bond-buying went off without a hitch on Wednesday

Reuters The Bank of England managed to purchase £1.17 billion of medium-dated UK government bonds on Wednesday, in a more successful reverse auction than the one conductedthe day before, when the bank was unable to persuade bond investors to part with their holdings in government debt.

The bank targeted UK pension funds and insurance companies to buy gilts, but struggled to fulfill its entire allocation of purchases. Tuesday's shortfall was the first since the bank started buying government debt in 2009.

One of the big drivers of the lack of enthusiasm to sell by UK pension funds — which are among the largest holders of safe, steady UK government debt — was that funds need the return provided by long-dated gilts in order to pay out to those people invested in their funds. Without that long-term return, many pension funds would struggle to fulfill their commitments, and as such don't want to part ways with their bonds.

British bond yields are plumbing record lows, with the benchmark 10-year gilt yielding just 0.54% as of 4:25 p.m. BST (11:25 a.m. ET). Here's the chart:

Investing.com

The idea behind the BOE trying to buy new bonds is a fairly simple one in theory. The bank buys billions of pounds worth of gilts, which in turn pushes up the price of the bonds, and sends their yield lower (yield moves inversely to price). This then makes investors look elsewhere for assets that give a higher return.